Search results
Results From The WOW.Com Content Network
What is adverse selection? In life insurance, adverse selection describes the occurrence of individuals with a high-risk profession, hobby or health condition applying for life insurance more ...
In economics, insurance, and risk management, adverse selection is a market situation where asymmetric information results in a party taking advantage of undisclosed information to benefit more from a contract or trade.
Death spiral is a condition where the structure of insurance plans leads to premiums rapidly increasing as a result of changes in the covered population. It is the result of adverse selection in insurance policies in which lower risk policy holders choose to change policies or be uninsured. The result is that costs supposedly covered by ...
An example of adverse selection is when people who are high-risk are more likely to buy insurance because the insurance company cannot effectively discriminate against them, usually due to lack of information about the particular individual's risk but also sometimes by force of law or other constraints.
Economists distinguish moral hazard from adverse selection, another problem that arises in the insurance industry, which is caused by hidden information, rather than hidden actions. The same underlying problem of non-observable actions also affects other contexts besides the insurance industry.
Adverse selection is a system that attracts high-users and discourages low-users from participating. Proponents of underwriting believe that if given the ability to purchase coverage without regard for pre-existing medical conditions (no underwriting), people would wait to purchase health insurance until they got sick or needed medical care.
Insurance company ratings take into account a number of factors. Besides the finances, the general health and ethics of the company are also considered before rating the insurer. Some other ...
Health insurance also falls into the consideration of adverse selection where healthy individuals with no family history of medical concerns may choose not to purchase health insurance as they don't feel the need to pay the premium, where other individuals with pre-existing conditions or a family history of medical issues are likely to purchase ...